CDB News

First Offering of “Bond Connect” Marking a Quick Success

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Time：2017-07-04 Source：CDB

On July 4, CDB successfully launched its first global offering of the “Bond Connect” financial bond with the total value of RMB 20 billion, which received enthusiastic response from both domestic and overseas investors, marking a series of breakthroughs as compared with other offerings of the kind: the largest in size with the lowest cost of issue, the largest number of overseas subscription orders, participation by the largest number of overseas investors, and the coverage of multiple channels including wholesale and retail.

According to statistics, this offering of CDB financial bond received a total overseas bidding of nearly RMB 10 billion, with successful bids worth over RMB 2 billion, representing the largest amount of subscription among similar offerings. In addition to investors from Hong Kong, this offering also attracted active subscription by overseas monetary authorities, as well as investors from Europe, Japan and Singapore, and a large portion of orders came from the Development Bank of Singapore, Bank of Tokyo-Mitsubishi UFJ (Hong Kong), BOC, and Bank of America (Hong Kong).

The interest rates for the 1-year, 3-year and 10-year bonds are respectively 3.53%, 3.9495% and 4.2082%, which are 27BP, 11BP and 1BP lower than the estimate of China Bond and are oversubscribed. The 1-year bond is concurrently issued to domestic individual investors through the outlets and online banking of ICBC, ABC and BOC.

Through this offering, CDB is committed to establishing a paradigm for issuing “Bond Connect” based on the existing accessibility of framework of domestic market, while keeping in line with international practices, and taking into full consideration the investing patterns and preferences of overseas investors. Measures are taken to provide more convenience for overseas investors, such as publishing announcement in English and bidding documents in advance, and reducing the minimum bidding price to as low as RMB 1 million.

The pricing was open and transparent as required by the market rules, and the bidding was made through the PBC bond issuing system, giving synchronous and equal pricing right to investors worldwide. The interest rates of all three types are lower than the secondary market level, among which the 1-year and 3-year bonds are respectively 12BP and 5BP lower than the same types on the previous day, showing high recognition of the CDB bonds by both domestic and overseas institutions.

In the meanwhile, the first offering of “Bond Connect” achieved extraordinary results in the secondary market, being not only the first underlying bond of “Bond Connect” secondary trading, but also the favorite bond of secondary trading hotter than other 5 bonds with different terms issued by CDB on the same day. Dealers included overseas central banks, funds, banks, and securities companies, demonstrating the great success of CDB bond in the secondary market.

Besides, the RMB bond issued by Maybank with CDB being the leading underwriter will be issued soon through “Bond Connect”. As part of the outcome of the Belt and Road Forum for International Cooperation, the fund raised by this program will all be used to support domestic and overseas construction projects under the “One Belt, One Road” initiative.

The “Bond Connect” mechanism is successfully initiated along with the first offering of “Bond Connect”. Marking another milestone in China’s financial market reform and liberalization, the “Bond Connect” mechanism has accelerated RMB internationalization and opened a new era for the bond market connectivity. According to sources of the CDB Treasure & Financial Markets Department, CDB will take the opportunity of the offering of “Bond Connect” to continue the cooperation with overseas institutions and keep exploring and innovating to enhance its global financing ability, and to make greater contribution to the liberalization of Chinese financial market and the development of the bond market.